MEMPHIS - Southeast regional discounter Fred's Inc. credited the "significant progress" it made in its fourth quarter and fiscal 2010 - which included double-digit net income gains -- to successes with its newly upgraded stores, improved merchandise selection, and strengthened customer service levels. "We are pleased to report a strong finish to fiscal 2010, with earnings per share up 47% for the fourth quarter," said Bruce Efird, ceo. "These results, which helped push earnings per share up 27% for the year, reflect the hard work and dedication of our team and their successful execution of our updated strategies - all within the context of a challenging retail climate." In the fourth quarter, which ended January 29, Fred's net income increased 49% to $8.6 million or 22 cents per diluted share compared with $5.8 million or 15 cents per diluted share in the year-earlier period. Total sales increased 3% to $485.6 million in the quarter from $473.1 million, and comparable store sales grew by 2.3% compared with a decline of 0.9% last year. For the full year, net income increased 25% to $29.6 million or 75 cents per diluted share versus $23.6 million or $0.59 the prior year. Fred's total sales for 2010 increased 3% to $1.842 billion from $1.788 billion, and comps were up 2.2% on top of an increase of 0.4% in 2009. Buoyed by these results, Efird said the 675-unit chain is cautiously optimistic about its 2011 performance. "While we expect that tough retail conditions will continue across our markets in 2011 due to ongoing concerns about higher petroleum prices and their effects on the economy, the progress we made last year provides a solid foundation to expand market share and continue our push for higher operating margins," he explained. In the first quarter of 2011, the company expects total sales to increase 2% to 4%, and comparable store sales to go up 1% to 3% versus an increase of 2.2% in the first quarter last year. Earnings per diluted share are forecasted to increase 14% to 24% to a range of $0.24 to $0.26 for the first quarter compared with earnings per share of $0.21 in the same period last year. Based on this outlook, Fred's expects total earnings per diluted share for 2011 to be in the range of 84 cents to 90 cents, representing an increase of 12% to 20% over last year.